Annual increase in labour costs at 3.4% in euro area

Notes for users

Revisions and timetable

The Labour Cost Index data are subject to revision, in particular for the latest quarters, when new source data become available.
The original data, before any subsequent revision, are also available here.

Compared with the News Release of 15 December 2023, the annual growth rate of the hourly labour costs, for the total economy in the third quarter of 2023 was revised from +5.3% to +5.2% for the euro area and from +5.7% to +5.6% for the EU.

In the case of Ireland, the annual growth of hourly wages was impacted downwards by the phasing out of the Employment Wage Subsidy Scheme (EWSS) introduced by government in March 2020 to support wages during the COVID-19 pandemic. It enabled employees, whose employers' business activities were adversely affected by the pandemic, to receive supports directly from their employer through the payroll system.

In the case of Germany, data have been revised due to benchmarking on the Labour Cost Survey 2020 (see national publication). In addition, wage data for the four quarters of 2022 are impacted by a change in data sources (see further explanation, in German). Due to this change in data sources, data for Germany show a break in series for total economy, business economy and construction, starting from the first quarter of 2022.

Methods and definitions

The Labour Cost Index is a short-term indicator showing the development of hourly labour costs incurred by employers, in nominal terms, that is without adjusting for price developments. It is calculated dividing the labour cost in national currency by the number of hours worked. Therefore, the development of variables, labour costs and hours worked, affect the evolution of the index (base year = 2020).

The quarterly changes in hourly employers’ costs are measured for total labour costs and its main components: wages and salaries; and non-wage costs (labour costs other than wages and salaries). Total labour costs (TOT) cover wage and non-wage costs less subsidies. They do not include vocational training costs or other expenditures such as recruitment costs, spending on working clothes, etc.

Wage and salary costs (WAG) include direct remuneration, bonuses, and allowances paid by an employer in cash or in kind to an employee in return for work done, payments to employees saving schemes, payments for days not worked and remuneration in kind such as food, drink, fuel, company cars, etc.

Labour costs other than wages and salaries (OTH - non-wage costs) include the employers’ social contributions plus employment taxes regarded as labour costs less subsidies intended to refund part or the entire employer’s cost of direct remuneration.

Eurostat publishes Labour Cost Index data for NACE Rev. 2 sections B to S. The aggregate is referred to as "Whole economy" for the sake of simplification, although sections A: ‘Agriculture, forestry and fishing’; T: ‘Activities of households as employers; undifferentiated goods and services producing activities of households for own use’ and U: ‘Activities of extraterritorial organisations and bodies’ are excluded. Section N: ‘Administrative and support service activities’ includes the activities of temporary employment agencies.

Recording of COVID-19 support schemes: in the first half of 2020, the governments of EU countries introduced the main schemes to alleviate the impact of the COVID-19 pandemic on enterprises and employees that consisted in short-term work arrangements and temporary lay-offs. In most cases, schemes were recorded as subsidies (or tax allowances) with a negative sign in the non-wage component of the labour cost index. This means that a decrease in subsidies, in particular following the phasing out of COVID-19 support schemes, translates on the opposite into an increase in the non-wage component of labour costs. This phasing out is, in general, visible in the first half of 2022.

Geographical information

The euro area (EA20) includes Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

The European Union (EU27) includes Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden.